Ashley Larmore, CPA - February 24, 2009
At Scinto Graziano, LLP we continually strive to bring our clients and colleagues up to the minute information on tax law changes or rules and regulations that can affect you. Recently, we have had many inquiries regarding allowable costs and cost allocation plans. Here is some information that may be of interest to you.
What's New about the New 990?
The changes cover topics that include governance, finances, fundraising, and program administration. In regard to governance, the new 990 contains:
- A new section, Part VI, Governance, Management, and Disclosure, that asks questions about the organization's governance structure, policies, and disclosure practices. As part of the section, an organization is asked to indicate if it has policies and procedures addressing such issues as conflicts of interest and whistleblowers.
- Part I is a revised section on the organization's mission statement.
- Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors, is a revised section on executive compensation which contains new definition of officers and key employees which is applicable to all organizations.
Other areas of significant change include determination of public charity status and public support; supplemental financial statement reporting; and fundraising, special events and gaming. Schedule A has been revised to emphasize reporting by charities of their public charity status and public support. Schedule D contains new reporting requirements for organizations maintaining donor advised funds or other similar funds or accounts; credit counseling organizations and others holding funds in escrow or custodial arrangements; and organizations maintaining endowments. Schedule G requires reporting of certain information regarding arrangements with professional fundraisers, special events, and gaming activities.
What Do the Changes Mean for Your Board?
While the IRS has no direct authority over the structure of a nonprofit's governing body, it cites the relationship between governance and fiscal oversight as sufficient reason to ask questions about governing structure and managerial procedures. Your board will want to ensure that the organization has the following policies in place, among others:
- Conflicts of Interest Policy
- Document Retention and Destruction Policy
- Whistleblower Policy
- Chief Executive Compensation Policy
I hope you find this information useful. Of course, we are available to answer any questions you may have regarding the new 990 form, audit or accounting queries. Look for more updates from us in the future!
